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The Case for Private Equity Real Estate
1 Add this to the growing list of headaches among wealth advisers: The aversion among individual investors to allowing their money to be tied up in private equity deals, despite the promise of an illiquidity premium. Given that institutional investors have such a high proportion of real estate exposure through private investments in real estate, why is the opposite true for individual high-net-worth investors? What do institutional investors know that individual investors do not?
Some context: Investors invest in both private and publicly traded real estate. Institutional investors, such as pension plans and insurance companies, gain exposure to private real estate through funds managed by specialist managers. In some cases, institutional investors, insurance companies in particular, have the staff with specialized expertise and experience investing in and managing real estate required to make direct investments in single assets or portfolios of assets. Exposure to publicly tra